Commercial, institutional sectors drag nonresidential construction starts down 5.4%

Dive Brief:

The value of July nonresidential construction starts fell 5.4% from June to $33.6 billion, defying the usual 3.5% seasonal uptick, according to ConstructConnect.
Month to month, the commercial sector (-26.4%) was responsible for most of July's downward departure from June starts, but institutional (-6.3%) was also in the negative. Both heavy engineering/civil (3.1%) and industrial (25.5%) were positive, but not enough to keep July starts out of the red. Year over year, industrial was the only loser (-40.4%), as institutional (19.1%), commercial (16.2%) and heavy engineering (6.8%) all beat the January-to-July start figures from 2015.
On a more positive note, July starts this year beat starts in July 2015 by 3.4%, and, on a year-to-date basis, starts from January through July 2016 were 11.6% higher than the same period last year.

Dive Insight:

ConstructConnect said July is typically the last month of the year for "seasonal lifts" in construction starts as the industry heads into the fall ramp-down and the less-active winter months.

Year over year, total jobs in architectural and engineering services were up 2.1%, an increase similar to that of last month, and ConstructConnect added that employment in building material and garden equipment stores was up 4.1%. The general construction industry employee increase of 14,000 in July has resulted in a year-to-date job gain of 55,000, which pales in comparison to the 136,000 gain the industry saw for the same period in 2015. However, the construction data research company added that the rate of change in construction employment is 3.3%, a figure twice as high as that for the overall economy.

ConstructConnect's 10 largest project starts of the month, once again, were all over the map geographically, but 50% were concentrated on the East Coast. The top six projects in dollar value were the Purple Line Extension — Los Angeles ($1.3 billion); Emergency Signal Repair and Generator Installation — Tampa (Carrollwood), FL ($710 million); FedEx Ground HUB — Allentown, PA ($335 million); NDWP IIT Mauka Extension, Airport Concourse — Honolulu ($198 million); Foreign Affairs Security Training Center FASTC— Blackstone, VA ($180 million); Oregon Health Sciences University-Knight Cancer Research Building — Portland, OR ($160 million).

Last month, Dodge Data & Analytics reported the value of June construction starts fell 7% to a seasonally adjusted annual rate of $595.1 billion, driven by a lack of large projects. However, the latest Dodge Momentum Index, which predicts future construction activity, inched up 0.5% in July, with both institutional (0.7%) and commercial (0.4%) up slightly.